Upstream M&A activity will increase in 2016 amid the continued oil price downturn, according to researchers at Wood Mackenzie. Likely dealmakers will include oil majors seeking strategic deals and other buyers looking to get in on the ground floor of a possible recovery. If market conditions improve, M&A activity will increase more rapidly as firms seek the “first mover advantage,” Wood Mackenzie said. Much depends on the overall trajectory of oil prices — high volatility could put the brakes on any deals by stacking the deck against one party or the other.
The oil price slide has already spurred a handful of megadeals in the upstream sector, including Halliburton’s agreement to buy Baker Hughes in 2014 and proposed deals between Shell and BG Group and Schlumberger and Cameron last year.
Meanwhile, U.S. crude futures fell to a 10-year low of just above $32 per barrel today on renewed concerns over China’s economy.
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